Sunday, January 2, 2011

Looking Forward With Yesterday's Action

Interesting article in this month's Technical Analysis of Stocks & Commodities. The author, Anthony Trongone, examined the next three days of price action in the S&P 500 SPDRs after upmoves and downmoves. While the author only used a short period of time in his analysis it was still very interesting. What many people might think is that after an upmove of 2% or more in the S&P 500 the market is in rally mode and is likely to rally over the next three days. After a down move of 2% or more, people might assume the market is in a decline and would go down the next three days. The analysis showed the opposite, on average the S&P 500 made money the next three days after a large decline and lost money the next three days after a large up move.

This goes along with a lot of our thinking on using counter trend analysis to profit from overbought and oversold conditions in the stock markets.

About Me

Matthew Tuttle is CEO and CIO of Tuttle Tactical Management LLC. Matthew is the author of "How Harvard & Yale Beat the Market" and "Financial Secrets of my Wealthy Grandparents". He is frequently quoted in the media.

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